Since the global financial crisis in 2008, the financial services industry has come under increasing pressure to improve transparency, which has resulted in wealth management firms facing a raft of measures.

Since the global financial crisis in 2008, the financial services industry has come under increasing pressure to improve transparency, which has resulted in wealth management firms facing a raft of measures.

Many experts believe that the volume and pace of change is the single biggest challenge facing wealth management firms, driving industry consolidation and creating significant and increasing compliance and non-compliance costs.

Despite these costs and changes, Raymond James Investment Services, the UK-arm of US-based wealth management firm Raymond James, believes the current regulatory environment provides the firm with a host of opportunities, Peter Moores, chief executive of Raymond James Investment Services, told this publication in a recent interview.

"I think we are in a stronger position than other firms because of the way we have always done things and the practices we have in place," said Moores.

Founded in 1962, Raymond James is a firm with its roots in the business of providing financial guidance and planning to individual investors and families, and this remains the firm’s primary business today.

In recent years, the Fortune 1000 company has gone from strength to strength. In 2012, the US parent company had revenues of $3.9 billion and total assets under management reached a new record of $52.7 billion in May 2013, up 32.1 per cent on May 2012.

Raymond James Investment Services was founded in 2001 and its assets under management have more than doubled over the last four fiscal years. For the financial year ending September 2012, it had assets under management of £2.97 billion ($4.4 billion), up 21.4 per cent from the previous year.

Raymond James also has more than 6,200 wealth managers serving more than 2.4 million accounts in approximately 2,500 locations throughout the US, Canada, the UK and elsewhere overseas.

The Retail Distribution Review was brought in to clean up the financial service sector and to give customers greater protection and confidence in the advice they receive, following scandals such as the mis-selling of payment protection insurance.

As the industry adapts to the end of trail commission and the RDR puts a further squeeze on profit margins, the prospects for wealth managers in the sector look uncertain.

Moores said that Raymond James was benefitting from the RDR and that it had had little effect on the way the company does business.

"Every year our market share is increasing and that is in part due to the way we price our services. As we rebated trail from fund groups we never developed a dependency on it, which meant it did not impact our business as we always agreed with our customers how and when we charged them," said Moores.

However, he believes some firms that have been living off product provider commission will now have a tough time.

"Introducing the new RDR charges can be challenging for many firms when dealing with clients because they often did not have a full appreciation of these costs. This could force customers to re-evaluate who they use for advice," said Moores.

FATCA

The Foreign Account Tax Compliance Act was implemented in 2010 by the US government to crackdown on expat citizens who might be evading taxes by using foreign accounts. It requires all foreign financial institutions to report to the IRS information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest.  

Raymond James has opted for the inter-governmental agreement approach, whereby the firm will supply information to HM Revenue and Customs which will then distribute it to the relevant authorities in the US.

As all of Raymond James's customers in the UK are onshore resident clients, Moores believes the legislation can only be a good thing for the firm. He notes that recent changes in tax secrecy laws between countries will only have a positive benefit for Raymond James as more people bring their money onshore as a result.

"With increasing pressure from governments around the world to raise tax revenues, there is clear pressure and a shift towards declaring assets which often results in assets being brought back onshore to help simplify people’s tax affairs. Firms like ours, that have built businesses around onshore and declared assets are going to be a net beneficiary of that," said Moores.

Branding

Following the 2008 financial crisis, customer trust in the financial services sector reached an all-time low. The turbulence in the sector means that expectations have changed and consumers are revaluating their relationships with financial companies. Branding is therefore more important than ever before to firms as they try to regain the trust of consumers and expand their growth in an increasingly competitive market.

The Raymond James brand is highly visible in North America. In 1998, the firm purchased the naming rights to the stadium where the NFL's Tampa Bay Buccaneers play and it is also well-known for its support of the arts.

However, this contrasts with the UK, where the company is focusing on creating awareness through the quality of service and reputation, rather than through marketing.

“What we want to do is make sure the wealth managers in our space are aware of us. We are trying to effectively build a brand in the wealth management community with good support material that can help the wealth manager get a feel for our business as a whole but also support them with material designed to help them inform the customers about our services," said Moores.

Technology 

According to experts, wealth management firms need to develop technology-friendly solutions to drive their business models to compete successfully. As the number of players that jostle for position in the industry increases, the firms that gain competitive advantage will be the ones that adapt their business and attune technology initiatives to meet the considerable challenges of compliance, security and servicing the different segments within the sector.

Moores believes that Raymond James is well-positioned to compete with other firms due to the investment it has made in its IT structure throughout the company globally.

"Wealth management firms often encounter problems when transferring technology across the Atlantic as it is often too expensive to make a US system global," said Moores.

"Where some try replicating what has gone on in the US, Raymond James allowed a level of local adaptation which has given us the flexibility in the UK to take the best from the UK and the US," he added.